Facebook Cagey About Mobile Monetization

Facebook will bank on mobile advertising to make money from mobile, and won't likely build out a mobile OS or market hardware (as some suspect), analysts told eWEEK.

When companies
cite certain risk factors in their S-1 filings with the Securities and Exchange
Commission, it's expected they will list competitors in their space. Companies
also like to list market uncertainties.
Facebook,
which filed its S-1
prospectus for a $5
billion IPO last week, listed mobile as one of those risks.

"We do
not currently directly generate any meaningful revenue from the use of Facebook
mobile products, and our ability to do so successfully is unproven," the
company wrote (page 13 of the prospectus).

"Accordingly,
if users continue to increasingly access Facebook mobile products as a
substitute for access through personal computers, and if we are unable to
successfully implement monetization strategies for our mobile users, our
revenue and financial results may be negatively affected."
Media
pounced on Facebook's mobile uncertainty, which is understandable considering
that more than half Facebook's 845 million member user base accesses the social
network from their mobile phones, including the mobile Website and via
applications.
Yet only days
later, media
reported that Facebook's popular sponsored stories ad format was coming to
users' mobile feeds. That didn't take long, but that wasn't the first time the
how-will-Facebook-make-money-from-mobile chant started.

Back before HP
said it would take webOS open source, some speculated Facebook could buy that
OS. Another way to address the problem is for Facebook to develop an operating
system, a la Android or iOS, and build out its own advertising ecosystem, just
as Android and iOS have done.
"Owning a
mobile application framework or run-time on devices, potentially with its own
app store, is one approach to help their application partners come along,"
IDC analyst Al Hilwa told eWEEK.
"Owning a mobile OS is another, but I think Facebook has its hands full
from an R&D agenda right now, and it is not clear it makes a lot of sense
for them to bash it out in the mobile operating systems world."
Hilwa sees
mobile advertising as they key for Facebook, which will have to tread in the
large footsteps of Google, Apple and others who are cutting their teeth on the
mobile Web after buttering their bread on the desktop Web.
EMarketer said
mobile advertising will top $2.6 billion this year, up 80 percent from $1.45
billion in 2011, which means there's plenty of opportunity for companies to
leverage.
Gartner
analyst Michael Gartenberg said Facebook doesn't need to build a mobile OS or
corresponding hardware to co-opt social activity on other companies' platforms,
thanks to integrations with Skype, Microsoft (through Bing) and even browser
makers such as RockMelt.
"It's
just a matter of time before they monetize those offerings effectively,"
Gartenberg told eWEEK. "Just
because Facebook hasn't monetized those opportunities yet doesn't mean they're
not going to," Gartenberg said.
For example,
Facebook could also ink partnerships to offer targeted ads on carriers' Android
and Windows Phone handsets. Facebook could also tap mobile gaming, accepting payments
for applications via virtual currency.
This field is
very green. In other words, what risk factors? Nothing to see here.
One thing's
for sure: Apple, Microsoft, Google, Amazon and Facebook continue to
increasingly get into each others businesses, building out their own walled
gardens on desktops and mobile devices.